Tehran Stock Exchange's all-share index, TEDPIX, closed 3,306.19 points or 3.33% higher compared to Wednesday to reach 102,452.4, marking the first time the index crosses the psychological barrier of 100,000. The uptick is also TEDPIX's highest single-day growth ever, surpassing the record set on Wednesday.
Things picked up at the very first hours of trade. TEDPIX zoomed past the 100,000 mark with a spiking growth in less than twenty minutes from the open and kept growing steadily up until 12:30 local time.
More than 1.82 billion shares worth $130.76 million changed hands at TSE, registering 13.75% and 26% growth compared to Wednesday respectively, Financial Tribune reported.
The narrative was not very different from Wednesday; export-oriented companies were leading the charge. Mobarakeh Steel Company, Persian Gulf Petrochemical industries Co., Golgohar Mining and Industrial Complex, Tamin Petroleum & Petrochemical Investment Co., Jam Petrochemical, and Khuzestan Steel Company were the top boosters to the benchmark, accounting for about half of the day's growth.
And the rest of the market were not idle, as developments in other indices show. The Free Float Index grew 3.2% to a high of 112,983 and the equal-weighted primary index jumped 2.2% to 18,287. Both indices' growth were higher than Wednesday's, suggesting fresh money being further invested across the market's industry spectrum.
Iran Fara Bourse was on the same page, too. Its main index, IFX, shot up 37.61 points or 3.26% to close at 1,191.36. The growth is slightly lower than the index's Wednesday performance, but has nevertheless boosted IFX to register a new historical high.
IFB's Sunday trade amounted to 608.3 million shares valued at $76.7 million, rising 47% and 76% in traded shares and trade value respectively.
Steelmakers and petrochemical companies dominated trade at Fara Bourse as well. Marun Petrochemical Co. came on top, followed by Zagros Petrochemical, Hormozgan Steel, Esfahan Steel, MIDHCO and Arfa Steel. They accounted for 23.93 points of the day's growth.
Growth Driven by 3 Factors
Head of Novin Investment Bank believes that the spiking growth is driven by three factors.
"First, there's the wandering money supply, which after upsetting the currency, gold coin, housing and auto markets has seen things ready to enter the equity market. The second is the stability in high global commodity prices, and the third is the rumors of a change in the government's forex policy and market's resolute reaction to it," Vali Nadi Qomi told SENA.
The change pointed out by Qomi seems to refer to introducing a type of a secondary forex market, as recently noted by the head of Trade Promotion Organization, Mojtaba Khsorotaj.
What this means is that a new market will be established for exporters of non-oil goods to trade their export declarations with importers looking for foreign currency but unable to procure any through official channels, our sister publication Donya-e-Eqtesad reported.
They keyword in Khsorotaj's talks is selling declarations at "agreed prices", i.e. free market prices, which is around 28,000 rials higher than the 42,000-odd government-enforced conversion rate. This is obviously a huge relief to exporting companies, and a whole lot of profit when they start recalculating their earnings using a new conversion rate.
What's more, the government agreed last week to sell petrochemicals their feedstock at 38,000 USD/IRR rates; another win for companies making up a large part of the stock market, and evident in the high demand for their shares.
CEO of Raha International Group, Behzad Golkar also echoed the same remarks, telling Bourse 24 that "the Central Bank of Iran and the government are planning to change their forex policies and apart from certain industries, others can trade their currencies at market prices. Nothing but this [development] could have moved the stock market."
And the market will grow even further, too, says the head of Bank Day Brokerage Fardin Aghabozorgi, forecasting that TEDPIX could reach the 145,000 mark by the current year's end (March 21, 2019).
"Experience tells us that a devaluation of the national currency will definitely have a positive effect on stocks . . . and as it is, investing in the stock market is a good option for those unwilling to see their capital devalue."
But there are still risks on the way. According to Nadi Qomi, the upcoming United States' sanctions and the still unknown fate of the nuclear deal Iran signed with world powers in 2015 (Joint Comprehensive Plan of Action), as well as local banks' sorry financial state of affairs and the still-high deposit interest rates pose a threat to stocks' growth.
He also emphasized that the growing prices, at least for the time being, are due to rial's devaluation, and the companies' actual profitability in the long run will rest on their ability to win new export markets, increase efficiency and cut costs.